EghtesadOnline: After the implementation of the historic international deal on Iran’s nuclear program in 2015, the country has managed to attract $14 billion worth of foreign investments, the head of the Organization for Investment, Economic and Technical Assistance of Iran announced.
“Since the beginning of President [Hassan] Rouhani’s tenure [in 2013], more than $21.8 billion worth of foreign finance have been approved by the Investment Board (including Central Bank of Iran, OIETAI and commerce chambers) and the relevant guarantees have also been issued,” Mohammad Khazaei was also quoted as saying by the official news outlet of the Economy Ministry.
According to a report published by OIETAI in early April, after the implementation of the nuclear accord with world powers, Iran has set its sights on implementing $50 billion worth of foreign finance.
Khazaei, who is also a deputy economy minister, noted that $12 billion of the attracted finance have been in the form of foreign direct investment while the rest has been allocated in other forms, Financial Tribune reported.
“According to the Sixth Five-Year Development Plan (2017-22), the Ministry of Economic Affairs and Finance and the Central Bank of Iran are obligated to attract at least $3 billion in foreign investments each year,” he added.
The deputy minister explained that foreign investments were finalized after long negotiations and the €8 billion credit line from South Korea’s Export–Import Bank was the first foreign finance to enter the country after the nuclear deal, which can be used in the projects of both public and private sectors.
The line of credit is part of a $13 billion South Korean finance to be spent on Iranian projects, namely Isfahan refinery and eight Siraf gas condensate refineries in Asalouyeh, among others.
The remaining $5 billion, which have yet to be finalized and agreed upon, is to be provided by Korea Trade Insurance Corporation.
The head of OIETAI also referred to the finalization of the $10 billion credit line from China’s CITIC Trust, which is going to be used in water management, energy, environment and transport projects in Iran.
The Beijing-based CITIC Group Corporation, formerly the China International Trust and Investment Corporation, is a state-owned investment company established in 1979.
“In recent weeks, we managed to sign a finance deal with Austria’s Oberbank, based on which a €1 billion credit line will be allocated for the development of civil and production projects in Iran,” Khazaei said.
Oberbank is Austria’s seventh-biggest lender, with a balance sheet of roughly €20 billion ($24 billion).
This is while the latest contract was signed with Denmark’s Danske Bank in which the European lender agreed to open a €500 million credit line for a number of Iranian agent banks to be used in Iranian projects.
The deputy economy minister noted that the approved foreign finance does not impose any kind of debt on the government or the private sector, as long as the credit lines are not used.
“When several European and Asian countries have agreed to sign financial contracts with Iran, despite all the issues that some countries like the US have caused, it will have a significant, positive impact on our country’s international credit rating while it also indicates that Iran is a stable country both politically and economically,” he said.
Khazaei emphasized that credit lines are different from business loans, as credit lines from foreign banks can only be used in infrastructure projects approved by the Economy Ministry.
According to the head of OIETAI, the resources will not be spent at the whim of any state or private entity but rather will be used under the supervision of the Economy Ministry, CBI and agent banks.
He added that the interest rate for the attracted finance ranges from 3% to 5%, depending on the currency in use while accounting for additional expenses like insurance fees.
“The biggest portion of FDIs is to be used in water, electricity and services sectors with railroad projects having attracted the biggest chunk of foreign finance,” he added.
Khazaei noted that CBI and the Economy Ministry should determine the extent to which the attracted finance will be used and how much debts can CBI manage to repay over the next 10 to 15 years.